All cells store fatty acids in neutral lipids (triacylglycerols[TAG] & cholesterol esters) in discrete intracellular lipid storage droplets. In the general cell population, very small droplets transiently sequester fatty acids which are used for membrane biosynthesis and as a source of energy. In adipocytes, which store the main bodily energy reserves, fatty acids are mobilized from very large, TAG-rich, droplets and exported to other tissues. In steroidogenic cells, the droplets contain primarily cholesteryl esters, precursors for steroid hormone synthesis. Our research focuses on the surface composition of droplets and the mechanisms by which lipids are both deposited and hydrolyzed. We find that droplet surfaces in animal cells are coated by related proteins, the perilipins and adipocyte differentiation-related protein (ADRP). Despite its name, ADRP is expressed ubiquitously and occurs on the surface of droplets in nearly all cells examined. However, the three perilipin isoforms are expressed primarily in adipocytes and steroidogenic cells. These cell types are unique in that they use a cAMP/protein kinase A (PKA)-mediated process to hydrolyze their stored lipids. Since perilipins are polyphosphorylated by PKA in concert with the lipolytic reaction, we hypothesize that these proteins participate actively in lipid breakdown. To assess the function of perilipins, we have created a perilipin null mouse by targeted disruption of the perilipin gene in murine embryonic stem cells. The perilipin null animals have greatly decreased (70-80%) adipose tissue but appear otherwise normal. Results from lipolysis studies with isolated adipocytes reveal the reason for the reduced adipose tissue. To wit, cells from the perilipin knock-out mice exhibit markedly elevated basal lipolysis, which is nearly one-half the maximal level of lipolysis achieved with beta-adrenergic receptor stimulation. By contrast, basal lipolysis in cells from control animals is approx. 5% of the maximum activity. These findings confirm our standing hypothesis, which states that perilipin functions to protect stored TAG from unregulated breakdown by hormone-sensitive lipase, the primary TAG lipase in adipocytes. Remarkably, the perilipin null animals exhibit none of the symptoms of lipoatrophic diabetes seen in other animals with dramatically lowered adipose tissue reserves. In contrast to these other models, which exhibit lowered levels of mRNAs for most adipocyte genes, expression levels are normal for most adipocyte genes in the perilipin-deficient adipocytes. Moreover, despite their constitutively high lipolytic activities and consequent outpouring of fatty acids from their adipose cells, the perilipin KO animals do not appear terribly glucose intolerant; they exhibit a mild glucose intolerance only when the animal exceed 30 g in total body weight. We anticipate that the perilipin KO mouse will prove to be a fruitful model system for further examination of the role of adipose-derive fatty acids in the development of type 2 diabetes mellitus.